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Coinbase could jump 65% as it benefits from cryptocurrencies going mainstream, JPMorgan says

May 25, 2021, 20:11 IST
Business Insider
Coinbase Founder and CEO Brian ArmstrongSteven Ferdman/Getty Images
  • JPMorgan initiated Coinbase at a Buy and set a $371 price target for the crypto exchange, according to a Tuesday note.
  • The bank believes Coinbase will be a prime beneficiary as cryptocurrencies go mainstream.
  • Shares of Coinbase are down 48% from the peak hit on the day the company went public in April.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Coinbase received a buy initiation and a $371 price target from JPMorgan on Tuesday, representing potential upside of 65% from Monday's close.

The bank believes the crypto-exchange platform is a prime beneficiary as cryptocurrencies go mainstream, according to the note.

"We see the crypto markets as durable and growing, and expect Coinbase has the opportunity to influence and benefit from this market growth as it innovates," JPMorgan said, adding that crypto-technology is "gaining trust as a store of value."

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That's a hotly debated subject, as some like economist Nouriel Roubini believe bitcoin and other cryptocurrencies are neither currencies nor assets, implying that they have little ability to be a stable store of value.

But JPMorgan believes cryptocurrencies are gaining interest from investors and "supplementing existing ownership of gold and fiat currencies," the note said. Coinbase is poised to take advantage of that growing investor interest as it builds its user base and expands its products and services tied to the crypto economy.

"We see the opportunity for Coinbase to grow crypto-cash management, derivatives, lending and advice," JPMorgan explained, adding that it believes the company will have success innovating as crypto-technologies continue to develop.

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JPMorgan's bullish note on Coinbase follows Goldman Sach's initiation note on Monday, which set a $306 price target for the company. But not all Wall Street analysts are bullish on Coinbase.

Mizuho lowered its price target on Coinbase to $225 from $315, as it expects a "crypto winter" to result in a reduction in trading volumes and peer valuations. The research firm observed that during the crypto winter of 2018, Coinbase saw monthly transacting users fall 70% in a one-year period.

Shares of Coinbase are down 48% from its high of $429.54 reached during its direct listing in mid-April.

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